TAP 04-005

Free File Notification of Charges

Statement of Issue:

FreeFile Alliance Partners may charge extra fees for filing particular forms or schedules such as the Schedule C or for additional services such as filing the state tax return or for printing the tax return.

Proposal:

The Committee concluded that taxpayers should be informed before beginning preparation of their tax return of any charges by the FreeFile service providers for using particular forms or services. The Committee recommended that the IRS develop a tool that would lead the taxpayer to the Alliance member(s) that best suited that taxpayer’s needs. The taxpayer would provide general information on the IRS site (through its Wizard or Gateway) to identify pertinent free Alliance software that matches the taxpayer needs. The completed profile should generate links to the FreeFile Alliance software that best fits the taxpayer’s requirements and also disclose any additional service fees before the taxpayer initiates the e-filing process.

Response Notes:

The IRS notified the Committee that taxpayers who meet a particular Alliance member's eligibility requirements will be able to complete their Federal income tax return and Efile it for free, regardless of the tax forms and schedules they use. IRS requires Alliance members to disclose all forms and schedules associated with their free offering. For example, more than one W-2, or lack of a form. State programs must be disclosed on each Alliance member's landing page and made clear whether such returns are free or paid, and, if paid, the cost. Members must also list their customer service options and the associated fees, if any. Taxpayers use the Free File Wizard to identify the free services they qualify for but, to protect privacy the information requested, the wizard is used only for such purposes and is entirely anonymous and not retained.